Where our economy is, for the young

These people struggle to pay rent each month let alone think about "investments".

This is money for when you lose your job for instance

Your appetite for risks and circumstances determine how big it should be (a good rule of thumb is six months worth of salary) but there are countless stories of people trying to be clever with their emergency funds and storing them in ETFs or riskier investments only to find that when the need comes, their fund is not enough and get in financial distress.

As for a real job, well, let's say that in Spain, it's complicated

Massive Caveat: I've not lived in Spain for over 20 years though I have friends and family

All currencies of the world are free-floating and not backed by anything and reserve banks keep constantly printing new currency and injecting it into the economy either via 'loans' through regular banks or through government contracts (since the Fed gives the government free money to pay for employees and big corporate contracts like the $10 billion one they gave to Microsoft recently).

For the past 10 years, we've had a situation such that interest rates have been at 0% and reserve requirements by banks have kept getting lower (since COVID19, they're 0%). This allows regular banks to print as much money as they like; whenever a bank makes a loan, they just type new currency into existence into someone's account. Also, the Fed has been buying toxic assets (such as bad corporate and mortgage debt) from the market (again using money that they just 'printed' into existence and backed by nothing).

This has created an economic situation with a lot of hidden inflation; most of it ends up inflating stock prices because corporations and their shareholders use bank loans to buyback their shares from the market; this causes artificial high demand for the stock and drives up the price (this is why corporations today have such low P/E ratios and pay low dividends relative to share price).

A lot of the buy orders on the market today are backed by debt (either which the corporation took out themselves to do buybacks or that of insiders or third-parties who have an interest in seeing the stock price go up).

Insiders understand that if interest rates can stay at 0% forever (which is what MMT advocates are promoting), then they will always be able to keep borrowing more money later to pay off their old debts because the stock price will always go up... And if the next generation comes along and starts doing the same thing (buying corporate stocks using debt), then each new generation ends up paying off the debts of the previous generation.

Note that this scheme works even if the financial instrument has nothing of economic value behind it. It's also why cryptocurrencies have been able to hold up such good valuations in spite of people paying for electricity to mine Bitcoin. They just restrict the supply, borrow money from banks, buy the asset, then in the future, someone else will take a loan to buy it and further drive up the price (and you'll be able to pay off your debt).

Banks do require collateral to give loans, but the problem is that a lot of the collateral these days is intangible and so people can just claim that the market price is the true value of the collateral... Which creates a vicious cycle and allows people to take bigger and bigger loans.

And the reason why corporations are not on an even playing field is because their executives and employees become wealthy from constant stock appreciation (fueled by collective debt) and then they invest in each other's businesses and award each other big contracts which keeps the currency circulating between themselves.

Echo chambers created by social media today help to prevent money from flowing between different classes of people. The big money tends to stay within the corporate sphere and is secured by a large network of venture capitalists and investors who only invest in people within that corporate sphere.

Any flow of money out of the corporate sphere can pose a major threat because it could pop the bubble when people realize how much more value they can get on the outside for the same money.

I think the remaining work will be such more meaningful that it will be net dealienation. I think less stress and more free time begets curiosity, so I think it's fair to say people could get a lot out of work than they do from their current drudgery.

In the long term, think large amounts of leisure time but ones does "tours of duty" in each of the core industries that power modern society as part of liberal education of how society functions.

> I also worry that the fundamental problem is not so much income but cost of living. The way things work today, any amount of UBI that you pay but just drive up the rent. If we don’t significantly increase housing supplies to meet demand, I don’t see how we can break that loop.

See https://phenomenalworld.org/analysis/universal-basic-income-... for the results of some modeling. Rent in absolute terms and as a portion of income went down!

Also, the company probably only has to pay those $40k to $200k in salary costs for a few years, but the benefits derived from the work might outlive it. There's nothing stopping anyone from firing an employee just because they previously made a massive contribution to the company's financial success. Why keep the cow if you can get the milk for free?

So it might even be the full $500k in pure profits after the 2nd year.

It isn't that we need to decide exactly who contributed proportionally and how much of the profits we get. We're really just reaching for something that increases wages faster than raises.

And really it highlights the issue that not only is it hard to get fair profit-sharing, it's also hard to get market-competitive raises.

But of course a company is going to say it's hard to decide who gets how much, because they have an incentive to pay their employees as little as possible, regardless if it's through base wages, raises, or profit sharing. There always seems to be an excuse.

I was with you until your last line. You don't have to build your own company - you can simply go after a job at a company that understands how beneficial it is to align the incentives of its owners and employees.

There plenty of ways to give workers a piece of the pie: there are full-on co-ops (at one end of the spectrum), and there are more watered-down implementations like stock options, ESPP plans, etc., all of which allow the worker to take on some of the risk and share some of the gains.

Plenty of companies also distribute simple profit-sharing bonuses, which (arguably) don't require the employee to take on any risk at all.

I chose to argue the way I did, because it is much easier to start at that end of the spectrum. If highly skilled highly productive employees who contributed massively to the company's bottom line cannot extract a fair share of the value in exchange for their work, then it's easy to convince someone that less skilled labor has these problems, too.

Nothing makes the CEO happier to know that you believe it is the employee's fault their jobs got outsourced, and not the fault of the CEO who wanted to maximize profit at the cost of millions of good paying American union jobs that actually helped families, communities, and created the 'American Dream', all so they could afford the status that brings when they show their new multi million dollar sailboat at the regatta. The job that was outsourced still needed to be done, someone still had to do it.

Speaking more broadly, these kinds of misaligned incentives are probably doing massive damage to the economy, in terms of lost productivity and innovation.

A huge chunk of the people who should be productive and be innovating literally don't have an incentive to do anything above and beyond keeping their job. It's all adversarial and extractive instead of cooperative. On both sides. Employers won't pay workers for the value the workers provide, and in return workers surf HN and reddit all day.

Meanwhile, apparently there's some kind of epidemic of "bullshit jobs." Again, go figure.

My point is that there are places where your contribution to the overall success is more directly related to what you are paid, however many people don't want to work at those places because it involves significantly more risk.

Let's say you have a nearly 100% chance of making $50k for the next 10 years for a total of $500k. Alternatively you can take a 10% chance at making $5 million total over the next 10 years. The reason that there is potential for a larger payout in the second job is because you are taking a greater risk. If you were working at a company where someone else was taking the risk, then the rewards likely flowed to those people.

For many young people, their first job gives them some data points about what they are actually capable of delivering so they can choose to work at places that trend toward rewarding contribution (startup, self-employed, etc.) or at places that don't (like your company) based on what type of performance they are capable of providing.

Many of these people eventually end up working at companies that _do_ have such systems. Anecdata: a friend of mine recently found a clever hack that increased ad revenue on a major product by some fraction of a percent for one of the world's largest internet companies. His bonus that year was equivalent to a down payment on a nice house.

However just because you increased revenue with you test in no way means you deserve to capture the value of it. You didn’t do it in isolation. At the very least the reason you were able to increase revenue by a third was because there was a revenue and a customer base to start with. You didn’t create that, that was given to you to leverage off of. I assume you had infrastructure and tooling support as well. So at the very least that increase revenue should be distributed amongst other employees that build the foundation in the first place.

So companies are effectively driving their employees towards creating future competition, as that seems to be the only way left for inventors to capture the value they create.

I suspect it works this way because to put it into software architecture terms, the trust is a microservice delivery model prerequisite, so people can loosely couple as needed to efficiently work on blockers. I find it ironic that many laypeople see the US military as a rigidly stratified, top-down command and control organization, but speaking to many military members, I find the amount of trust (once earned) placed in startlingly young and junior members far exceeds most commercial organizations. Despite all the military war stories of ineptitude and incompetence, I don't think it is a coincidence that compared to the average commercial organization, the military is still perceived by many to "get 'er done".

This is fantastically difficult to achieve because it requires a from-the-top commitment to developing human, empathic leadership on top of management (which is already a difficult to master skill set by itself). It takes enormous emotional guts and vulnerability to be in that kind of leadership; I know it would challenge my personal limits for sure, possibly even break them. This takes decades of continuous work without interruption through top leadership succession evolutions.

For that specific example, it's because there was no risk on your end for developing the product. To capture it's value the IP would have needed to be developed outside the company and licensed to it. But that's way more risky.

> So why should I have ever gone above and beyond in the first place? Meanwhile my manager repeatedly complained to me that I only worked 9-5.

You shouldn't have, at least, not there. Clearly they had no clue how innovation happens and how to create an environment where the type of people who innovate ends up.

Also: https://wolfstreet.com/2015/11/04/corporate-profits-are-the-... Under "This is a new America" you can watch corporate profits grow and grow.

But both your source and my source are 5 years old already. A lot has changed since then.

If the library didn’t have it, you could hit a small book store, whose specialty was romance novels for local farm wives.

Basically, anything you would actually want would be special order, hoping the book dealer knew what you were talking about in the first place.

Um, what?

If you want to buy a house "disposable income" directly translates into ability to save up for down-payment.

I think the difference between now and 50 years ago is that everyone wants to live in a few select dense cities where back then most of the middle class didn’t want to live in cities (especially true in the US).

In some dense cities in particular, renting (typical for young people prior to property purchase) can be very expensive.

My sense is that this creates a large transfer of wealth from professionals to property owners on a monthly basis.

Across San Francisco or New York, for example, what percentage of the paycheck sums paid by employers is redirected to their landlords?

If that percentage were to rise it would become more difficult for young people to become property owners since it'd be challenging for them to put savings aside.

With that context provided: disposable income is an attempt to quantify how effectively people could save towards property purchase - regardless of whether they decide to take that route.

(and to some extent it's also a 'guard metric' to detect communities that rent-seek to unsustainable levels)

Edit: 'tech companies' -> 'employers' in third para, and remove assumption of high salary. This doesn't just affect tech..

And I really mean that - I don't know. Some cultures thrive on women being subjugated to men. Some cultures thrive on authoritarian levels of control that are inconceivable in the west.

By comparison, a desire for land ownership seems pretty mundane.

This thread actually breaks it down by metro -> https://twitter.com/jmhorp/status/1221828310000271361

The home-price-to-income ratio has remained mostly unchanged for all metros except for the infamous coastal ones.

At this moment, here’s a quick breakdown of the salary necessary to buy the median home, by metro -> https://www.hsh.com/finance/mortgage/salary-home-buying-25-c...

Here's a list of the most populated metropolitan areas in the US -> https://en.wikipedia.org/wiki/List_of_metropolitan_statistic...

Among the top 10, only 3 experienced a substantial multiplier increase (New York, LA, Miami).

Among the top 20, only an additional 4 (San Francisco, Seattle, San Diego, Denver)

That means only 7 of the top 20 most populated MSAs experienced a substantial multiplier increase. It's largely dependent on local land use policy.

Edit: To clarify, he says "net tuition", then throws out a $15,000 number for modern colleges. That's on the low-to-medium end of the per-semester cost of a modern public institution, so I'm assuming he's also listing the per-semester cost for the 1986 tuition.

If I move to the big city, and I go from spending 30% of $50,000 on rent to spending 50% of $100,000 on rent that's going to look bad whatever measure of housing affordability you use.

But after rent, I've got $50,000 left instead of $35,000 - so maybe I'll get a BMW instead of a Camry.

Also CPI doesn't really account for housing prices in many of the metros where the best jobs are or higher education prices.

What exactly does "net tuition" exclude? Financial aid comes in many forms - grants, loans (multiple kinds), work study. Excluding some of these might be fair. Excluding others would be chicanery.

> the majority of Americans attend public universities (myself included

Also, the majority of students attend big universities. Want to guess how tuition has increased at Texas A&M or Ohio State vs. a legion of tiny schools that barely achieve accreditation? How many of the sources you found on Twitter are improperly taking an average across schools instead of across students?

It is not all young people who will earn a lot of money later.

Based on the empirical tax analysis, 12% of the population found themselves in the top 1% of the income distribution for at least one year. 39% of Americans spent a year in the top 5% of the income distribution, 56% found themselves in the top 10%, and a whopping 73% spent a year in the top 20% of the income distribution.

Measuring these things in percentages hides the fact that the underlying numbers are immensely different. Perhaps if we reported numbers differently, we would say that the pay increase for the high-paid worker was 2.5x the pay increase for the low-paid worker.

Regarding "The IMF was unable to reproduce":

"Piketty's response[54] noted, however, that Góes used measures of income inequality rather than wealth inequality, and inappropriately took the interest rate on sovereign debt as his index of the rate of return on capital, which makes his results not commensurate with those of Piketty's study."

Regarding "Auten & Splinter further refuted":

"There’s plenty of other literature, mentioned in the Auten-Splinter paper, the Economist articles and elsewhere, that challenges the methods used by Piketty and his collaborators. Such challenges are mainly possible because tax data draw an incomplete and often difficult-to-interpret picture of the income distribution. Tax systems are complex, different governments choose not to tax different kinds of income, and of course people, rich and poor, cheat on their tax returns. Measuring wealth inequality rises to a whole new level of difficulty: Since so few countries have wealth taxes these days, only guesstimates of the wealth distribution are possible.

So on Tuesday, Piketty, Saez, Zucman and a long list of other signatories issued a sweeping response to critics of the popular inequality narrative, pointing out that all the data-based arguments can be settled by making solid data available."

Unsurprisingly, these two doesn't seem to very convincing "refutations".

In percentage points. If someone gets a pay rise from $1/hr to $2/hr, they will experience a dizzying 100% wage growth, more than any CEO could ever hope for.

This is simply a mathematical property if small numbers, it doesn't contain any meaningful information on economic development or policy.

So basically do what some states have done for plumbers, electricians or other trades with a licensing body and professional cartel?

Bars to entry and a strong incentive to keep the status quo once you're in will certainly jack up prices and pay and businesses who have to follow the law will have to get their gig services from the cartel members but everyone else will just consume less of the services. Considering that these gig economy services are mostly consumer facing I think you'd just see demand fall off a cliff if prices were raised by regulation. The survivors would have high wages but unless some other employment option is available labor force participation will suffer.

I think if it was as easy as cranking the regulation knob to 11 someone would have already done it.

Choice Quote: "The price tags for tuition and fees at colleges and universities have risen twice as fast as wages, if not more, in recent years. Rental costs are outpacing wage gains by a percentage point or more a year. Health-care costs have grown twice as fast as workers’ wages. And child-care costs have exploded."

"The data" is not homogeneous or infallible, nor can it fully describe all phenomena it's applied to. At best, data can provide us with a rough approximation of the landscape it attempts to describe. In this particular case, I think that landscape is smaller than the territory established by the OP's linked blog post (which seems to transcend the easily-measurable world of simple economic indicators).

Would you consider it prudent to dismiss one's lived experience offhand, at the mere site of a few quickly-pasted links to tweets containing simple, decontextualized data points? What, then, if another commenter subsequently provides contradictory data? Scrolling through a typical HN thread would turn into a nauseating ride on some sort of intellectual see-saw.

If the commenter you responded to is "not convinced" by some tweeted factoids claiming that Americans are working less and making more than ever, does that imply that they're ideologically motivated?

I don't think so, no more than I think your reply to them implies that your own motivation is ideological. Without additional context, those "facts" don't significantly imperil any specific worldview.

I think everyone who read my comment understood what I left unsaid, even if they didn't agree with it. And, as the saying goes, there are lies, damned lies, and statistics.

Just because an argument is logical and has facts doesn't mean it's correct. There are multiple ways to shape, work with, or interpret data.

But, speaking of data, is the guy who's tweets you referenced - Ernie Tedeschi, a reliable source? Better or worse than, say, Alan Greenspan? What are his general biases? Same with the Bloomberg article. That article itself said "A rising but uneven tide - the late '10s weren't equally beneficial to all Americans."

Plus, let's use Occam's razor. Which way does it cut?

- Rent prices in major cities / economic hubs for non-tech workers.

- Cost of healthcare in the US

- Cost of higher education in the US

- Cost of home ownership by major cities in the US.

- Job security and availability of well-paying work for non-tech workers?

- Is the economy benefitting those who need it most?

- How equitably have the fruits of economic growth been distributed?

But the value in this data is in helping us understand what the root causes are, and what the solutions should be.

> Arbitrarily excluding certain metro areas because "you're a techie and can live anywhere" is just counter to reality, and just seems like a way to skew the numbers.

The goal behind "arbitrarily" analyzing the data per-metro is not to skew the numbers, but to help us understand that the root cause is largely local, rather than a global systemic one. Everyone knows that housing is way more expensive than a median income can afford in San Francisco, but that's a San Francisco problem, not an America problem. It's also one that's generally well understood: they're not building enough housing due to exogenic limits.

Young people = usually in debt (student, auto, credit card, mortgage) and hoping to earn their way out with income."

Rich young people are being financially supported by their rich parents. Poor young people aren't as their parents aren't 'asset holders' either.

The whole 'generational conflict' is a ruse, like so many of the divisive narratives being propped up, especially in the US but also in many other places, to further divide and distract.

The 'trickle down' economic fairy tale is one propagated by both parties, ever since the Regan years imho.

Or can't.

Empirically that's not the case. There are plenty of tales of outsourcing in pharma going wrong, yet the stock market rewards contracting out to CROs over doing stuff in-house.

Recently: https://chemistryjobs.acs.org/job/29501/associate-director-d...

Director of Outsourcing in Discovery. In Discovery. That's not even a cost center, the real costs are incurred later in the pipeline, at that stage you want to keep the life scientists, the structure guys and the synthetic chemists all in one building. But Genentech are now part of Roche and a public company needs to keep an eye on the stock market.

That said, some of 'em are also clearly overdoing it, like resisting the construction of a children's playground which might be within hearing distance.

There are plenty - if not the majority - of disciplines in software and firmware that don't have these levels of risk.

I can still write a dog sharing social media app, but I wouldn't be able to interface with a satellite.

Something along those lines.

The Big-O complexity of mergesort hasn't changed since the 1990s, certainly.

But our industry's answer to "what does a properly designed website login system look like?" has changed a great deal since the 1990s.

As far as I know, software is the only field that can get away with something like this:

THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS “AS IS” AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT OWNER OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

Imagine finding something like this on a pack of aspirin.

So if I want to make a new radiation therapy machine, I won't be able to pull in random crap from NPM. My software will need a PE sign-off, and so will my dependencies. This will hopefully lead to some OSS libraries getting certified (perhaps with corporate interest funding the certification), creating an excuse/incentive for other companies. Now some bank will notice that a third-party app they use internally has eaten their data several times, causing monetary loss, and it'll decide that going forward, PE-certified software is prioritized during procurement. Creating incentive for non-critical software vendors to get their software certified. Etc.

I'm not sure if the dynamics would play out this way, but it seems plausible. The goal here is to retain free experimentation - I'd hate to end up in a world where you aren't allowed to use a Turing-complete language without a license - while at the same time forcing responsible software practices where they matter.

You've explicitly named lotteries and acted as if they're the same as actual gig employment. I have several instagram influencer friends, and a few who make youtube videos on the side. It's their dream to go pro. You want to know their collective income, from a pool of about 10 people, who have been working at this for over a year? It's under $100. That's not a gig, that's a lottery that costs time and energy.

If you want to talk gigs, talk about Wag or Uber. Which, are also definitely not the same gigs that the article was talking about.